News International executives are facing demands to appear before MPs to
answer allegations that they suppressed evidence of widespread illegal
activity at the News of the World.

The company is under mounting scrutiny following revelations that an internal inquiry in 2007 gathered ‘‘smoking gun’’ emails showing that several of its journalists were hacking mobile phones and making payments to police officers.

The evidence was only passed to the police last month, four years after it was collected. During that time, James Murdoch, European chief executive of News International, personally authorised at least one substantial settlement payment to a victim of phone hacking, in exchange for signing a gagging clause.

That has led MPs to accuse News International of a “cover-up on a massive scale” and of misleading Parliament. The latest twist in the scandal that forced the closure of the News of the World left Mr Murdoch and his allies fighting to prevent the affair doing further damage to the wider Murdoch media empire.

Despite the damage-limitation exercise, political pressure on the company continued to mount yesterday. In another blow to Mr Murdoch, there were signs that David Cameron, under pressure from Labour and his Liberal Democrat partners, is preparing to sanction a new and potentially damaging delay in News Corporation’s bid to take over British Sky Broadcasting. News Corp is News International’s parent company.

In other developments yesterday Rupert Murdoch, the chief executive of News Corp, flew in to handle personally the company’s response to the mounting revelations, and it was disclosed that Rebekah Brooks, News International’s UK chief executive, has contacted Scotland Yard detectives and offered to be interviewed as a witness rather than a suspect.

It also emerged that the family of Milly Dowler will this week meet Mr Cameron and demand an immediate public inquiry into the scandal.

The News International internal investigation is said to have involved around 2,500 emails from the accounts of News of the World staff.

They were assembled in 2007 by two News International executives, Daniel Cloke and Jon Chapman, after Clive Goodman, the tabloid’s royal editor, was jailed for phone hacking. The emails are said to implicate several of the paper’s staff in phone hacking and suggest that the practice was “more widespread than Clive Goodman”.

The suggestion that his company had evidence of phone hacking in 2007 has exposed James Murdoch to questions about his role in handling the affair.

In 2008, he signed off a compensation payment to Gordon Taylor, the head of the Professional Footballers’ Association, whose phone had been hacked.

In exchange for his payment, Mr Taylor signed a confidentiality agreement, forbidding him from discussing the matter.

For several years after Goodman’s conviction, James Murdoch and Mrs Brooks insisted that Goodman had acted alone and no one else at the company knew about phone hacking or other illegal activities. The company also made several statements to Commons committees to that effect, statements which now face intense scrutiny.

Tom Watson, a Labour member of the Commons culture committee, said Mr Murdoch and Mrs Brooks should be called to face MPs’ questions about the internal inquiry and when they knew about it. “It is a fantastical notion that only two people knew about this report and its incriminating emails,” he said.

“It is now clear that our committee was misled, which is why I am insisting that we invite James Murdoch and Rebekah Brooks to address us to put the matter right.’’

He said: “It is inconceivable that the senior management of News International did not know about this. It is quite clear that Parliament has been lied to.”

Mr Murdoch and Mrs Brooks cannot be compelled to speak to a select committee, but Mr Bryant suggested that MPs could summon them to the bar of the House for questioning, a sanction last applied in 1957.

“Parliament will have to address this issue of being misled,” Mr Bryant added.

“It is open for Parliament to summon someone to the bar of the house.”

A News International source said last night that Mr Murdoch and Mrs Brooks did not see the internal report until April this year, and now accepted that decisions like the payment to Mr Taylor were wrong.

The source added: “Once Rebekah and James became aware of the contents of the report they realised that some of the decisions they had made were based on the wrong information.”

The emails also suggest that Andy Coulson, a former editor who later worked for David Cameron, as his Number 10 communications chief, was aware of payments to police officers. Even now, not all of the 2,500 emails have been located.

Around 300 of them are understood to have been held by a London law firm asked to “review” them in 2007.

The company passed details of the investigation to Scotland Yard on June 20, leading to Mr Coulson’s arrest last week.

Mr Coulson, who denies wrongdoing, was released on police bail until October.